Bundling policies can save money

By Mark Vallet on November 2nd, 2011

Bundling insurance policies--buying at least two separate policies from the same insurer, usually with the goal of obtaining a multi-policy discount--is one of the most common strategies for reducing premiums.

Fifty-eight percent of customers bundle their auto and home insurance policies, according to the 2011 U.S National Auto Insurance Study conducted by J.D Power and Associates.

The discount from bundling varies depending on how many products are bundled, but the savings can be up to 35 percent. Discounts on deductibles may also be included with bundled policies. This means that if multiple assets such as your house and car were damaged in a severe storm, only one deductible would be charged.

Bundling not only saves money, it saves time. Using only one insurance company to handle all of your insurance needs is convenient. There is less paperwork to file, fewer checks to write and only one agent to call when it's necessary to file a claim. Bundled customers tend to have a deeper relationship with their agent, making it easier to add or change policies.

Bundling can be more expensive

While the discount for bundling can be substantial, it is often possible to find a better deal by keeping your auto and homeowners policy separate.

Insurers that specialize in auto insurance are often able to undercut the prices of multi-line carriers. According to industry experts, auto insurance is more profitable for insurers, making the field more competitive. It is possible for consumers to find a better deal if they are willing to shop around.

Bundling can leave you with less than ideal coverage. While mono-line insurers such as Geico are willing to bundle auto and homeowners policies, they only underwrite the auto portion of it. Another company services the homeowners policy. This means that while you will get a bundling discount, you'll still have to deal with two insurance companies.

Bundling tips

Experts advise you to compare insurance rates about once a year. Deciding whether to bundle or keep your policies separate requires a bit of research, as everyone's situation is different. Things to keep in mind include:

Use an independent agent to help you find the best deal. Independent agents have the expertise to shop a variety of insurers.

Get quotes for standalone home and auto insurance and compare them to bundled quotes.